Woodland Hills-based Health Net Inc. had higher net earnings for the second quarter of this year, but its total revenues dropped due to changes in its government contracts segment.

The managed health care company had net income of $58.3 million, or $0.63 per diluted share, in revenues of $2.8 billion. For the same period the previous year, the company had net income of $45.1 million, or $0.45 per diluted share, on revenues of $3.4 billion.

The company’s revenue drop is due to a decline in Government Contracts revenues, which fell to $171 million for the second quarter this year from $851.9 million for the same period a year ago.

That decline is the result of a new T-3 TRICARE North contract that became an “administrative services only” contract. The new contract started April 1.

“Membership in our tailored network products grew, commercial margins expanded and the transition to the new TRICARE contract went smoothly,” said Jay Gellert, Health Net’s CEO. “We continued to buy back stock, repurchasing 2.3 million shares in the second quarter for approximately $72.3 million.”

For the third quarter, Health Net is projecting consolidated revenues between $12 billion and $12.5 billion. It is raised its 2011 annual guidance for earnings per diluted share to a range of $0.63 and $0.68, or $3 to $3.05 for the combined Western Region Operations and Government Contracts segments.

Jessica Vernabe